12:35pm (EST)
We knew today could be challenging for the bulls as futures were weak throughout the night and worsened as we headed towards the opening bell. The weekend homework we did showed the same support and resistance levels as last week but Friday’s hope has faded as Europe once again takes center stage.
Moody’s (MCO, $34.48, down $0.94) decided to beat Standard & Poor’s and Fitch to the podium this morning and warned that last week’s European fiscal plan wouldn’t deter them from reconsidering the credit rating of all the European nations. We said last night in our Weekly Wrap that Wall Street might need a little more convincing on Europe’s “plan” and we certainly didn’t get expect the rating agencies to provide any help.
Here was the other thing we said last night and this morning in our updates as we were looking into the rest of the month and January:
“The one thing that worries us is that some 4Q earnings announcements, which will start hitting the Street in January, could come in below the bar. We have already seen a few warnings but those that will miss and haven’t warned could see their share price take a hit. If there is a high profile miss or warning, it could signal trouble ahead.” (END)
Someone on the board must have heard us as Intel (INTC, $23.90, down $1.11) cut its 4Q estimates just before the opening bell. The company blamed the flooding in Thailand, which is where a quarter of the world’s hard disk drives are produced, and the supply shortage as the main reasons for slashing $1 billion off its sales forecast.
Intel also lowered its gross margins 0.5% to 64.5%. The $1 billion miss is the headline but we are still impressed with any company making over 60% gross margins. Wow.
Of course, the market is looking half empty following today’s news but support is holding, to a degree, and the close could be crucial.
As we head to press, the Dow is down 224 points to 11,960 while the S&P is lower by 25 points to 1,229. The Nasdaq is getting hit for a Grant (50 points) and is at 2,596.
Our portfolio is light as we wait for the December options to expire this Friday and we are preparing for our next batch of trades. We said in November that the market could fall back into a trading range following the push to resistance and since then that is how things have played out.
We used the volatility to close 44 out of 52 winning trades since August and the market is setting us up for another big round of trades. We aren’t sure if they will be call or put options but we outlined specific levels to watch for as far as support and resistance. A break above or below these levels will give us the clues we need.
We also mentioned the current environment is flushing out a lot of traders and we are proud to report that we will be one of the few, if only, option newsletters to report a profit for our subscribers this year. While other services are promising results, we are delivering and we plan to continue that trend into 2012.
We will be offering a yearend special on our Weekly Wrap which is looking to go 18-0 for the year and our Daily publication, which has hit on 65% of our recommendations. If you do the math, we are crushing the major averages and the Wall Street pros along with the smoke-and-mirror newsletters.
Subscribers, check the Members Area for the updates and stay locked and loaded. We could be on the verge of opening a new batch of trades very soon to go along with our current ones.